US Product Rental and Leasing Sector
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 51,175 product rental and leasing establishments in the US provide the use of commercial and consumer goods in return for lease or rental payments. Establishments may rent or lease nonfinancial intangible assets, including patents and trademarks (but excluding copyrighted works).
Seasonal, Uneven Demand and Cash Flow
Cash flow in the equipment rental/leasing sector is seasonal and driven by the dynamics of downstream industries.
Variability in Residual Value
Firms are exposed to financial risk when the market value of a vehicle or rental good is less than its depreciated value (residual value) when it is sold.
Industry size & Structure
The product rental and leasing services sector is comprised of 51,175 establishments that employ 585,900 workers and generate $210 billion in annual revenue, according to government sources.
- The product rental and leasing services sector represents 1% of the nation's Gross Domestic Product (GDP) and employs 0.4% of the country's workers.
- The sector is concentrated with the 20 largest firms representing 48% of revenue.
- In addition to employer establishments, the product rental and leasing services sector has 83,000 owner-operated establishments with no employees. Subsectors with the highest numbers of nonemployer establishments are commercial and industrial machinery and equipment rental and leasing (42%); automotive equipment rental and leasing (26%); and consumer goods rental (23%). The owners of nonemployer establishments typically perform the work and may outsource support functions like marketing and accounting.
- The product rental and leasing sector has shed about 4,100 establishments annually, which equals about 8.7% of existing establishments. However, the sector has added about 4,300 new establishments annually, which is equivalent to 8.4% of existing establishments. As a result, the sector has an average loss rate of 0.3%.
- The product rental and leasing sector is forecast to grow its employment base by 2.5% overall in 2021-2031, which is much lower than the national average of 5.3% for all jobs, according to the Bureau of Labor Statistics.
Industry Forecast
US Product Rental and Leasing Sector Industry Growth
Recent Developments
Jul 10, 2024 - Construction Spending Flat
- The total value of construction put in place decreased by 0.1% in May 2024 compared to the prior month, according to the US Census Bureau. Spending for nonresidential projects in May declined 0.1% from April, and residential spending fell by 0.2%. Within the nonresidential segment, spending growth was led by a 2.2% increase in sewage and waste disposal projects, followed by manufacturing (+1.3%), transportation (+0.9%), and communication (+0.7%). In commenting on May construction spending, Associated Builders and Contractors (ABC) Chief Economist Anirban Basu said, “Nonresidential construction spending has fallen for two consecutive months yet remains just 0.2% below the all-time high achieved in March 2024. Much of that progress is attributable to ongoing infrastructure investments, which spurred a sizable 0.4% increase in publicly funded nonresidential spending in May.” Construction spending is a demand indicator for construction equipment rental and leasing.
- The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25) showed new business volume was up 11% to $10.2 billion in June 2024 compared to the same month in 2023. The MLFI-25 reports economic activity from 25 companies that represent a cross-section of the $1 trillion equipment finance sector. May’s business volume decreased 7% compared to April’s $11 billion. Year-to-date, business volume was up 6%.
- Sunbelt Rentals, a division of UK-based equipment rental firm Ashtead Group, posted rental revenue of $8.3 billion for the fiscal year ending April 30, 2024, up 11% from fiscal 2023. For fiscal 2025, Sunbelt expects rental revenue growth of 4% to 7%. Sunbelt estimates that in 2024, it held an 11% share of the US equipment rental market, while Sunbelt competitor United Rentals held 15%. Sunbelt believes that two or three leading players will control about half of the US equipment rental market in the future.
- Global travel spending – a demand indicator for rental car services – is expected to reach pre-pandemic levels by next year, according to recent data by the US Travel Association. Worldwide travel spending is expected to reach $1.129 trillion in 2024 and then increase to 1.173 trillion in 2025, which would match travel spending levels in 2019. US travelers plan to take over 800 million interstate trips in 2024, near pre-pandemic levels.
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